Commercial National Reports Higher Earnings For 2019

LATROBE, PA / ACCESSWIRE / January 27, 2020 / Commercial National Financial Corporation (OTCQX:CNAF)(Company), parent Company of Commercial Bank & Trust of PA, has reported results for the quarter ended December 31, 2019. The Company earned $1,219,000 (or $0.43 per average share outstanding) in the fourth quarter 2019 compared to $1,143,000 (or $0.40 per average share outstanding) in the fourth quarter of 2018. The Company earned $4,736,000(or $1.66 per average share outstanding) for the twelve-month period ended December 31, 2019 and $4,345,000 (or $1.52 per average share outstanding) for the twelve-month period ended December 31, 2018. Fourth quarter earnings increased 6.65% and full year earnings increased 9.00%.

The Company's annualized return on average assets for 2019 rose to 1.12%. Fourth quarter tax equivalent net interest margin at 4.13% was indicative of the Company's very successful administration of balance sheet optionality relative to emerging financial market conditions. Asset quality metrics remained outstanding across-the-board. The effective tax rate for 2019 was only 10.62%. Tier one risk-based, total risk-based, leverage and common equity tier one capital ratios at year-end 2019 were all exceedingly strong at 20.80%, 21.32%, 13.26% and 20.80% respectively. Low cost liquidity sources remained ample as evidenced by the Company's appropriately sized AFS bond portfolio's extensive net unrealized market value gains which represented 6.92% of book value at year-end 2019. All of the aforementioned financial diagnostics favorably compare to prevailing banking industry norms and are reflective of Commercial National Financial Corporation's admirable safety and soundness over an extended number of years.

Cash dividends paid per share in 2019 reached a new all-time record high of $2.54. Dividends paid during 2019 included four regular quarterly payments of $0.26 per share plus a special $1.00 per share dividend and a special $0.50 per share dividend. The Company's cash dividend payouts to shareholders were fully supported by current year earnings in conjunction with undistributed earnings from 2018 and 2017. Total cash dividends paid in 2019 constituted a $7,267,000 return of capital to the Company's shareholders. The Company's underlying core earnings together with its substantial capital provide the capacity to maintain the regular $0.26 per share quarterly common stock cash dividend payments to shareholders. As circumstances allow, special extra cash dividends will continue to be periodically considered by the Board of Directors.

Direct and beneficial ownership by executive officers and directors of the Company's outstanding shares totaled 476,175 shares, or 16.64% on December 31, 2019.

As disclosed each year in the Annual Report to Shareholders, on December 31, 2019, the Company employed 98 people in full-time and part-time positions. Forty-six (46) employees are represented by the United Auto Workers, Local 1799. Of that bargaining unit total, thirty-seven (37) employees are full-time and nine (9) employees are part-time. The Company has had unionized employees since 1972. In October 2018, the agreement between the Company and the bargaining unit was negotiated and subsequently ratified by the bargaining unit with an effective date of February 16, 2019. The labor agreement will expire in February 2024. The Commonwealth of Pennsylvania and the National Labor Relations Board both afford protection to the organized status of pre-existing collective bargaining units. The Company has been advised that bargaining unit status may limit the Company's strategic options relative to those of non-unionized insured depository institutions. The Company continues to consider this as a factor in its strategic and capital management decisions.

The Company operates nine community banking facilities in Greensburg, Hempfield Township, Latrobe, Ligonier, North Huntingdon, Unity Township and West Newton, Pennsylvania and also maintains a commercial business development sales force throughout its entire market area. The Company operates an asset management and trust division of Commercial Bank & Trust of PA headquartered in Greensburg, Pennsylvania. Commercial Bank & Trust of PA also serves its customer base from an Internet banking site (www.cbthebank.com) and an automated TouchTone Teller banking system.

Safe Harbor Statement

Forward-looking statements (statements which are not historical facts) in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may," "will," "to," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements are based on information currently available to the Company, and the Company assumes no obligation to update these statements as circumstances change. Investors are cautioned that all forward-looking statements involve risk and uncertainties, including changes in general economic and financial market conditions, unforeseen credit problems, and the Company's ability to execute its business plans. The actual results of future events could differ materially from those stated in any forward-looking statements herein.

COMMERCIAL NATIONAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in thousands)

 
December 31
 
 
December 31
 

 
2019
 
 
2018
 

ASSETS

Cash and due from banks on demand

 
$ 
4,510
 
 
$ 
5,642
 

Interest bearing deposits with banks

 
 
47
 
 
 
59
 

Total cash and cash equivalents

 
 
4,557
 
 
 
5,701
 

Securities available for sale

 
 
150,838
 
 
 
159,741
 

Restricted investments in bank stock

 
 
899
 
 
 
1,411
 

Loans

 
 
238,407
 
 
 
227,747
 

Allowance for loan losses

 
 
(1,374
)
 
 
(1,349
)

Net loans

 
 
237,033
 
 
 
226,398
 

Premises and equipment

 
 
3,262
 
 
 
2,800
 

Investment in Life Insurance

 
 
20,310
 
 
 
19,767
 

Other assets

 
 
2,675
 
 
 
3,808
 

Total assets

 
$ 
419,574
 
 
$ 
419,626
 

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

Deposits:

Non-interest bearing

 
$ 
133,362
 
 
$ 
128,437
 

Interest bearing

 
 
198,986
 
 
 
197,482
 

Total deposits

 
 
332,348
 
 
 
325,919
 

Short-term borrowings

 
 
20,200
 
 
 
32,822
 

Other liabilities

 
 
4,102
 
 
 
1,351
 

Total liabilities

 
 
356,650
 
 
 
360,092
 

Shareholders' equity:

Common stock, par value $2 per share;

10,000,000 shares authorized; 3,600,000 shares

issued; 2,860,953 shares

outstanding in 2019 and 2018.

 
 
7,200
 
 
 
7,200
 

Retained earnings

 
 
60,554
 
 
 
63,085
 

Accumulated other comprehensive income

 
 
7,714
 
 
 
1,793
 

Less treasury stock, at cost,

739,047 shares in 2019 and 2018

 
 
(12,544
)
 
 
(12,544
)

Total shareholders' equity

 
 
62,924
 
 
 
59,534
 

Total liabilities and shareholders' equity

 
$ 
419,574
 
 
$ 
419,626
 

COMMERCIAL NATIONAL FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)

 
Three Months
 
 
Twelve Months
 

 
Ended December 31
 
 
Ended December 31
 

 
2019
 
 
2018
 
 
2019
 
 
2018
 

INTEREST INCOME:

Interest and fees on loans

 
 
2,690
 
 
 
2,509
 
 
$ 
10,520
 
 
$ 
9,391
 

Interest and dividends on securities:

Taxable

 
 
1,041
 
 
 
1,089
 
 
 
4,183
 
 
 
4,323
 

Exempt from federal income taxes

 
 
429
 
 
 
523
 
 
 
1,997
 
 
 
2,098
 

Other

 
 
25
 
 
 
26
 
 
 
116
 
 
 
77
 

Total Interest income

 
 
4,185
 
 
 
4,147
 
 
 
16,816
 
 
 
15,889
 

INTEREST EXPENSE:

Interest on deposits

 
 
179
 
 
 
200
 
 
 
749
 
 
 
573
 

Interest on short-term borrowings

 
 
149
 
 
 
234
 
 
 
837
 
 
 
618
 

Total Interest expense

 
 
328
 
 
 
434
 
 
 
1,586
 
 
 
1,191
 

NET INTEREST INCOME

 
 
3,857
 
 
 
3,713
 
 
 
15,230
 
 
 
14,698
 

PROVISION FOR LOAN LOSSES

 
 
–
 
 
 
–
 
 
 
–
 
 
 
–
 

NET INTEREST INCOME AFTER

PROVISION FOR LOAN LOSSES

 
 
3,857
 
 
 
3,713
 
 
 
15,230
 
 
 
14,698
 

OTHER OPERATING INCOME:

Asset management and trust income

 
 
337
 
 
 
311
 
 
 
1,429
 
 
 
1,306
 

Service charges on deposit accounts

 
 
184
 
 
 
189
 
 
 
724
 
 
 
736
 

Net Security gains/losses

 
 
75
 
 
 
–
 
 
 
68
 
 
 
(11
)

Gain on sale of OREO

 
 
–
 
 
 
–
 
 
 
4
 
 
 
–
 

Income from investment in life insurance

 
 
130
 
 
 
127
 
 
 
510
 
 
 
505
 

Other income

 
 
31
 
 
 
43
 
 
 
163
 
 
 
213
 

Total other operating income

 
 
757
 
 
 
670
 
 
 
2,898
 
 
 
2,749
 

OTHER OPERATING EXPENSES

Salaries and employee benefits

 
 
1,911
 
 
 
1,852
 
 
 
7,552
 
 
 
7,273
 

Net occupancy expense

 
 
179
 
 
 
221
 
 
 
799
 
 
 
860
 

Furniture and equipment

 
 
104
 
 
 
120
 
 
 
413
 
 
 
489
 

Pennsylvania shares tax

 
 
143
 
 
 
142
 
 
 
569
 
 
 
554
 

Legal and professional

 
 
121
 
 
 
133
 
 
 
396
 
 
 
456
 

FDIC Insurance expense

 
 
–
 
 
 
29
 
 
 
56
 
 
 
113
 

Other expenses

 
 
759
 
 
 
745
 
 
 
3,044
 
 
 
3,002
 

Total other operating expenses

 
 
3,217
 
 
 
3,242
 
 
 
12,829
 
 
 
12,747
 

INCOME BEFORE INCOME TAXES

 
 
1,397
 
 
 
1,141
 
 
 
5,299
 
 
 
4,700
 

Income tax (benefit) expense

 
 
178
 
 
 
(2
)
 
 
563
 
 
 
355
 

Net income

 
$ 
1,219
 
 
$ 
1,143
 
 
$ 
4,736
 
 
$ 
4,345
 

Average Shares Outstanding

 
 
2,860,953
 
 
 
2,860,953
 
 
 
2,860,953
 
 
 
2,860,953
 

Earnings Per Share

 
 
0.43
 
 
 
0.40
 
 
 
1.66
 
 
 
1.52
 

Contact Information:

Wendy S. Piper, First Senior Vice President, Secretary/Treasurer
wpiper@cbthebank.com
724-537-9923

SOURCE: Commercial National Financial Corporation

ReleaseID: 574180